Risk Management and Diversification Strategy to Evaluate MNE Systematic Risk in Emerging Economy

Yuang Shiang Chao ()
Additional contact information
Yuang Shiang Chao: Department of Finance and graduate school of financial management, Nan Hua University, Taiwan

Journal for Economic Forecasting, 2018, issue 3, 131-152

Abstract: This study mainly assesses the joint effects of diversification configuration on firm performance and systematic risk. We selected 269 stock public-listed firms to examine the separate and their joint effects on systematic risk. From our findings, high diversification configuration significantly leads to high systematic risk. However, systematic risk goes worse at high levels of country and region diversification. The findings led to the conclusion that the effect through “China involvement” which had co-opted and caught the strategic resources from the regions to focus its FDI policy objectives especially expands the country scope. It’s important to consider how to maintain the competitiveness of their ventures in China to expand the markets overseas. The contribution is to connect the impact factors to analyze which model is beneficial for MNEs to evaluate the risk management in emerging economy. The results point out MNEs should use resource-based advantages through moderate diversification strategy and middle China involvement strategy to access to better risk management and reduce systematic risk.

Keywords: joint effects; diversification; systematic risk; China involvement (CI); multinational enterprises (MNEs); emerging economy; risk management (search for similar items in EconPapers)
JEL-codes: C11 C32 E44 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://www.ipe.ro/rjef/rjef3_18/rjef3_2018p131-152.pdf

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:rjr:romjef:v::y:2018:i:3:p:131-152

Access Statistics for this article

Journal for Economic Forecasting is currently edited by Lucian Liviu Albu and Corina Saman

More articles in Journal for Economic Forecasting from Institute for Economic Forecasting Contact information at EDIRC.
Bibliographic data for series maintained by Corina Saman ( this e-mail address is bad, please contact ).